NEW YORK, Sept 24: After a historic, hour-long meeting in New York on Friday, Indian and Pakistani leaders issued a joint statement that recognized Kashmir as an issue and agreed to explore all possible options for a peaceful settlement.

"I sincerely believe that today is an historic day and we have made a new beginning," said Indian Prime Minister Manmohan Singh as the two leaders emerged from the meeting room with a tired but contended look on their faces.

"And I feel confident that despite the difficulties on the way, I and President Musharraf will together work and succeed in writing a new chapter in the history of our two countries," he said.

Mr Musharraf agreed. "I hope that this augurs well for the future of Indo-Pakistan relations," he said. "The two leaders also addressed the issue of Jammu and Kashmir and agreed that possible options for a peaceful, negotiated settlement of the issue should be explored in a sincere spirit and purposeful manner," said the joint statement that President Musharraf read out after the meeting.

The statement, although an important diplomatic document in itself, was more noticeable for what it omitted than what was said. The most notable omission was that of the Indian claim that Pakistan was encouraging cross-border terrorism in Kashmir.

The document also emphasized the need for "a peaceful negotiated settlement" of the 56-year-old dispute, a phrase Indians strongly objected to in the recent past, insisting that Kashmir was their internal problem.

But in the joint statement, the emphasis was on accommodating, rather than confronting, each other. The language, and the tone, both reflected this desire as both sides avoided terms that had complicated problems in the past.

The discussions were held in "a constructive and frank spirit" and the two leaders reiterated their commitment to continue the bilateral dialogue to restore normalcy and cooperation between India and Pakistan, the statement said.

"They agreed that confidence-building measures of all categories, under discussion between the two governments, should be implemented keeping in mind practical possibilities."

The two leaders, according to the statement, agreed to maintain the spirit of the Islamabad declaration issued after an equally historic meeting between President Musharraf and former Indian Prime Minister Atal Bihari Vajpayee in January that set the current peace process rolling.

"In the spirit of the Islamabad statement, they agreed that CBMs will contribute to generating an atmosphere of trust and mutual understanding so necessary for the wellbeing of the peoples of both countries."

The two leaders also discussed the possibility of a gas pipeline from Iran to India via Pakistan, a project that could benefit both India and Pakistan but has been a victim of mutual suspicions.

"It was felt that such a project could contribute to the welfare and prosperity of the people of both countries and should be considered in the larger context of expanding trade and economic relations between India and Pakistan," the statement said.

The document also reflected the desire of the Pakistani leader to go beyond "hackneyed positions" on Kashmir and make a fresh start, as he said at a news conference on Thursday.

Senior diplomatic sources told Dawn that the format and the tone of the talks was settled by their two senior aides, Tariq Aziz and J.N. Dixit, in Dubai last month where they finalized the New York meeting.

But the two leaders did finalize the joint statement and Mr Singh, as President Musharraf pointed out, allowed him "the honor" of reading it out to the media. "Before I embarked on this journey, people asked me what your expectations of meeting President Musharraf were," said Mr Singh in his brief remarks to the press. "I said to them that this is an easy task in mutual comprehension."

Mr Musharraf contributed to creating a friendly ambiance for the talks by presenting Mr Singh a painting of his native village in Pakistan, an album of his childhood friends and a report card from the village school where Mr Singh had studied before migrating to India after the partition.

"Aap nay mera dil moh liya (You have won over my heart)," said the Indian prime minister after receiving the gifts. "I was only checking who got better marks in mathematics," joked the Pakistani president.